Brumby opens the state's coffers

Page Tools

Victoria's economy is strong, and this budget is beginning to share the fruits of prosperity.

With the significant exception of its decision to build the Mitcham-Frankston Freeway as a toll road, the Bracks Government has generally aimed to reassure voters, not to surprise them. The Government's 2004-05 budget, which Treasurer John Brumby brought down yesterday, is definitely a document in the no-surprises vein. Most of its contents had been reported beforehand, and most will make life moderately better for most Victorians.

The estimated operating surplus of $545 million for the coming financial year, together with projected average surpluses of $571 million for the following three years, puts the Government well within its self-imposed minimum surplus of $100 million. In consequence, although this is not an election year, Mr Brumby has produced the sort of budget that most governments would want to take to an election: there are tax cuts and spending increases. And both the cuts and the spending are carefully targeted, allowing the Government to give back some of the revenue a buoyant economy has poured into the state's coffers without endangering the surplus.

AdvertisementAdvertisement

Some of the biggest tax cuts, such as the abolition of stamp duty on mortgages from the beginning of the financial year, will benefit both businesses and home buyers, and acknowledge the part that the property market has played in the state's strong economic performance. The property boom is subsiding but the market shows no sign of collapse, and the less burdensome tax regime, coupled with a new $5000 first home buyers' grant to top up the existing $7000 Commonwealth grant, is likely to attract new buyers into the market.

The large surplus has also allowed the Government - after five years marked chiefly by restraint - to accelerate the flow of funds to Victoria's schools and hospitals. The $1.6 billion increase in health-care spending over four years will include relief in some areas, such as public dental care, where it has long been needed.

For the most part, the Government has kept its pledge to keep the focus on families in this budget, including families with special needs and children at risk: $21 million will be allocated over four years to help foster carers, and an extra $25 million has been found for the child-protection system.

But even mild budgets carry a sting somewhere, and the pensioners, health-care cardholders and veterans who now pay nothing to register their cars will in future have to pay $80. This is still only half the cost of the full registration fee, however, and it will enable the Government to give more generous public-transport concessions to health-care cardholders and students. Again, this is shrewdly targeted spending, directed at those who are most in need. The Bracks Labor Government has presented itself as pro-business, but in this budget it has not ignored Labor's traditional constituencies either.